Empire editorial: PFD hyperbole

Posted: Sunday, January 10, 2010

Two lawmakers from Anchorage are proposing a constitutional amendment to place the Permanent Fund Dividend under the protection of Alaska's Constitution. The idea is laughable but it makes for good campaign fodder.

This is not the first time and not likely the last when the PFD is used as a political football to be punted around just to get name recognition in an election year. The two proponents of the amendment are both seeking election to higher office, one a congressional seat and the other eying the Governor's office. What better way to get positive name recognition than to stir up an issue close to every Alaskan's heart and pocketbook, and be labeled as the saviors of the PFD.

Gov. Sean Parnell will be proposing a 2011 budget that holds the line on state spending growth at 3 percent, including advanced funding of K-12 education for future years and setting a tidy sum aside for reserves. There is no immediate threat to our PFD. Don't get distracted by the political rhetoric of a non-issue.

Will there come a day when the dividend is no longer available? Yes, likely.

At some point we will again have to shoulder responsibility for funding state services and programs, and it will probably require a greater financial investment than what we receive in an average PFD distribution. The 2008 average household income in Alaska was $67,332. Personal income tax rates in western states are 5.0 percent in Utah, 6.9 percent in Montana, 9 percent in Oregon and 9.3 percent in California. Apply similar tax rates to the average Alaskan household and we'll pay $3,300 or more annually in income tax - more than twice the amount of the average dividend payout.

The dividend was never intended as an entitlement, but after 33 years it is hard for some to see it as anything but. Constitutional amendment or not, Alaskans will still be on the hook for funding state government when and if a convergence occurs between revenues and costs.

We agree with the prevailing sentiment that all cost control options must be exhausted before tapping the Permanent Fund or instituting any kind of personal income tax. We also believe that we Alaskans have control over our own destiny in this regard.

We can embrace our state's vast natural resources and growth opportunities in research, tourism and the like, and can support thoughtful expansion in these areas to ensure healthy revenue streams. The other option is we continue to allow influence by outside entities and lawmakers who tell Alaskans how we should live and what we can and cannot do.

Let us remove roadblocks and work to avoid the financial crises many states in the Lower 48 are experiencing because of their failure to take appropriate action in a timely fashion. Let's not just stand still with our hands out until the coffers run dry.